If you work at a startup, hearing the line "If You Build It, They Will Come" should make your stomach churn. You probably already know that such thinking comes from an inflated ego and un-backed pride, but if a member of your team has that thinking, you'll need more than rhetoric to keep your organization from hurtling towards a fiery death.
First off, the number one reason that startups fail is building something no one wants to buy. 95% of startups fail, according to a CBS Insights report, and 42% of those are because people didn't come to what they built.
"Build it and they will come" discounts all the complexities and nuances of creating a successful venture, and if that thinking is adopted, it virtually guarantees failure. If it were true, anyone with a few hundred dollars could spit out an MVP and create a successful business.
People aren't automatically attracted to new products like flies are to light. It's actually the opposite. People really don't care about anyone's product, they care about the value it can add to their lives, and shitty products don't add value.
In fact, an average user has to see an advertisement about 7 times before starting to engage with a product, and if it isn't great, they won't be coming back.
So far, a more accurate motto would be:
"Build a great product that people need, and repetitively bombard prospective users with targeted content, and you'll have a greater than 5% chance of success."
Besides, the motto "build it and they will come" doesn't specify which they. Users? Clients? Partners? It's just they, which means that if it were true, we wouldn't need the marketing, sales, or business development industries.
Currently, around 6 million Americans work in non-retail sales. Marketing and ads contribute to over $1 trillion in revenue, with around $300 billion in ad spend. "Build it and they will come" would topple entire segments of the economy!
Let's look at a specific example: The blockchain industry.
As of September 2019, there are around 212,000 ERC-20 tokens. These are the common "utility tokens" you hear all about that run DApps, like Tether, the Binance Coin, and the Basic Attention Token.
The #10 token at the time of writing had a market cap of less than 10% of that of the #1 token ($260m vs Tether at $4.1bn). If you scroll to just #100 in the list, you'll notice that its market cap is roughly $20 million - less than 0.5% of the market cap of the #1 token. What if we scroll to #1,000? Well you can't, because the lowest market cap token is around $100 at spot #967. The rest are all worth $0.
Since 967 tokens out of 212,739 tokens had any value - that means less than half a percent of tokens had any value.
I scrapped the data of all tokens from Etherscan, and found that the #1 biggest token is worth as much as the bottom 95% combined, and that's excluding the 200,000+ worthless tokens. Here's the code:
import pandas as pd import re df = pd.read_csv("crypto.csv") df['Market Cap'] = df['Market Cap'].str.findall('(\d+)') df['Market Cap'] = df["Market Cap"].apply(lambda x: ', '.join([str(i) for i in x])) df['Market Cap'] = df['Market Cap'].str.replace(',', '') df['Market Cap'] = df['Market Cap'].str.replace(' ', '') df['Market Cap'] = df['Market Cap'].astype(float) df['Market Cap'].iloc[45:].sum() df['Market Cap'].iloc.sum() 100-((45/df.shape)*100)
The top token (at index 0) has a similar market cap (4.1bn) as the combined markets of those at index 45 and beyond. The last line is how we get the 95% figure. Let's make it even more extreme by including the 200k+ worthless tokens, just for fun:
The result is 99.98%, meaning that the top Ethereum token is worth more than the bottom 99.98% combined.
There's a similar story to tell for any industry, where a pyramid is established such that those at the top, the truly great businesses, acquire a largess of wealth. In fact, this is reflected in human society more broadly.
No statistic shows this more clearly than the fact that 26 people own more wealth than the bottom 50% of humanity (0,000,000,026 people versus almost 4,000,000,000 people).
The same is clearly true with products. I could repeat the token example with the 300+ cryptoexchanges out there, but hopefully you get the idea. (Spoiler: Only a few of those exchanges are successful, the rest built it, but they didn't come).
If you want to stick to a simple motto, here's a better version:
"Building it doesn't mean they'll come."